The widespread view of Africa as one huge problem point on the planet’s body characterized by pandemics, hunger, poverty and wars – the so-called “Afropessimism” – has now been replaced with an approach which was launched by global powers as they compete for economic and political presence on the continent. After a lull, Russia has joined the race as well.
According to Russian President Vladimir Putin, “African states are steadily gaining political and economic weight, asserting themselves as major pillars of the global multi-polar system and enjoying ever more say in making decisions on the most critical issues of the regional and global agenda.” Significantly, Africa accounts for about one third of the votes in the UN.
After Russia made an impressive “comeback” in the Middle East, Moscow became attractive for states seeking alternatives to the old political and economic ties. The first African country to do that was the war-torn Central African Republic, and the next to follow was Sudan, a country facing a similar challenge. Then more countries did the same. At present, more than 30 African countries have reached agreements with Russia which envisage the development of geo-resources, the supply of produce of the military-industrial complex, and the training of army personnel and law enforcement forces. Among the most significant contractors are Algeria, Egypt, Angola, Uganda and Nigeria.
The consistent and rarely publicized efforts of the Russian diplomacy resulted in the first Russia-Africa summit, which was held in Sochi on October 23-24. The day earlier, the Russian-African Economic Forum opened in Sochi too. Of the 62 African legal entities officially recognized by the UN, the Russian forum was attended by heads of state of 43 countries while another 11 participated at minister and ambassador level. Abdel Fattah al-Sisi represented both Egypt and the African Union.
During the Sochi forum, Russia and African countries signed more than 500 agreements worth about 800 billion rubles. Considering the low solvency of African partners, the participants came to agreement to set up a $ 5 billion trade support fund. The success of the forum prompted the decision to hold it regularly, every two years.
China seems to be Russia’s top economic competitor on the Black Continent. Beijing offers African countries big but easy loans and builds social infrastructure facilities on a gratuitous basis. China attaches great importance to “soft power” by promoting cultural and scientific contacts in an attempt to form loyal national elites. Every year thousands of Africans are granted scholarships to study at Chinese universities. As a result, ten years ago, China snatched from the United States its leadership as Africa’s trade and economic partner thereby becoming one of the major investors and donors to African countries.
Since the beginning of the century, the China-Africa Cooperation Forum has been held regularly, with nearly four dozen African countries joining the One Belt One Road mega-project.
And finally, (as investments have to be protected) in 2017, a Chinese military base appeared in Djibouti, the first beyond the bounds of the PRC.
Simultaneously, Africa’s growing dependence on Chinese financing may become one of Russia’s competitive advantages as the continent starts to look for alternative partners.
The United States has unintentionally been contributing to this, by criticizing the policies of Moscow and Beijing in Africa. Washington has become seriously concerned with measures to repulse the “expansion” of China and Russia. In December 2018, the Trump administration presented a new strategy for Africa, or in fact, a plan to counteract the activity of Russia and China on the continent. There have been numerous official statements to this effect. “These countries are expanding their financial and political influence to Africa by applying “aggressive” practices and acting for their own benefit, which poses a threat to US national security,” – the then adviser to the American president, John Bolton, said, as he unveiled the program. It turns out that the United States is acting in Africa to the detriment of its own interests?
China bore the brunt of criticism. Bolton, as usual, lashed at Beijing for many things, but above all, for using loans to enslave the Black Continent. Last summer, during the US-Africa business summit in Maputo, the United States launched the Prosperous Africa Economic Program. The Program’s ultimate goal is the same – to contain the growing influence of Russia and China by expanding trade with countries of the continent, by promoting American technology and by boosting assistance in the anti-terrorism campaign. According to Bolton, the new approaches will allow African countries “to remain independent in reality, not in theory”. But for the rhetoric, there is little new in the American approach.
Europe boasts traditionally strong positions on the African continent. After they gained independence, the authorities in many former French colonies’ capitals installed monuments to Charles de Gaulle. African countries are interested in cooperating with the European Union in three interrelated areas: peacekeeping, which is so critical for the Black Continent, receiving economic and humanitarian aid, and assistance in the anti-epidemic effort.
In turn, the EU is more set on measures to thwart illegal migration from the African continent, which is its top priority for now. Simultaneously, the EU is trying to be realistic about the economic and political potential of African partners. As far back as in April 2000, Cairo hosted the first EU-Africa summit, attended by heads of state and government. Seven years later, the Strategic Partnership Agreement for Trade and Democracy was signed in Lisbon, designed to boost economic and political ties and calling for “genuine cooperation” and partner equality.
Nevertheless, the number of Europeans present on the continent has been dwindling. Even the French who until recently affected the political situation in Francophone Africa have become fewer in number. According to the authoritative French weekly Le Point, Paris “is losing ground here,” and should thus “come to its senses”, as its influence and economic weight on the continent are steadily declining.
Incidentally, Ankara embarked on cooperation with the continent years ago. The first summit on Turkey’s cooperation with African countries (mainly Muslim) was held in 2008. This year the third summit took place. Since 2010, the government has been following the so-called “African Strategy.” The Turkish Foreign Ministry has proudly reported on its website that the two parties have been demonstrating mutual interest in bilateral ties, which becomes clear from the following figures: while in 2009 there were only 12 Turkish representative missions on the Black Continent, today their number totals 39. And African countries have increased the number of their diplomatic missions in Ankara threefold – from 10 to 33 – over the same period.
Speaking of the prospects for cooperation between Russia and Africa, we can say first of all that Russia is one of the top ten exporters of food products to African markets. Secondly, Moscow is one of the major suppliers of military produce to the continent – the value of military contracts in 2019 is expected to exceed $ 4 billion. Thirdly, local consumers are quite satisfied with the price-quality ratio of many Russian-made products. And the contractors can pay for these goods: Africa accounts for up to one third of the developed mineral reserves, and given that surveys were not always carried out at the appropriate level and did not cover all resources-rich areas, there are more. So, the fourth area of Russia-Africa cooperation is geological prospecting work.
Addressing the Sochi forum, President Putin made it clear to African guests that Russia had no intention to repeat the mistakes of the USSR, which was determined to multiply the number of political pseudo-allies at the expense of economic feasibility. The United States and the EU have also reiterated the mutually beneficial nature of trade and economic relations. Moreover, all actors regularly write off Africa’s debts, and Moscow is no exception.
And finally, it is necessary to point out that Western countries invariably make this cooperation conditional on the “right”, from their point of view, foreign and domestic policies of their contractors. Russia has a clear edge here as it does not seek to force its opinion on anyone, be it Europe or the African continent.
From our partner International Affairs
Can cryptocurrencies be used as a geopolitical weapon? The case of Central African Republic
April 27 can be considered a trailblazing day for the cryptocurrency industry in Africa, as the Central African Republic (CAR) approved bitcoin as its legal tender. This is the second country globally to move forward with such a bold move, after El Salvador, in September 2021, decided to adopt the prevalent cryptocurrency for internal financial transactions. This move might be seen by blockchain and cryptocurrency enthusiasts as the start of a revolution in Sub-Saharan Africa and, under certain circumstances, this might prove to be true, eventually. Nonetheless, in the current state of affairs, where CAR ranks in the 9th place in poverty globally and only 15% of its residents enjoy the perks that electricity entails, this move seems to be out of scope and not taking into consideration the actual issues that people in the Central Africa state are facing. In addition, the adoption comes at a very suspicious timing, where Russia, CAR’s main security guarantor, already 4 months into the war on Ukraine, is eyeing positively cryptocurrencies as a way to perform financial transactions. Combined with the overall conundrum in the region regarding cryptocurrencies and the urge of the Bank of Central African States towards Bangui to annul this decision, a strong geopolitical element arises. Hence, several questions are brought up, including the feasibility of such a decision and the impact it can have on the local communities, lessons that can be learnt from regions where crypto tokens are being mined, as well as threats and potential geopolitical implications for CAR and for the region.
Can bitcoin make such a big impact on the CAR community?
As mentioned, it would be safe to deem it impossible that a nation with less than 15% access to electricity, less than 10% access to internet and a highly problematic grid could, at the moment, support an energy-intensive practice such as decentralized finance and its broader mining process. President Touadera, a PhD holder and assistant professor in mathematics, is fully aware of that and hitherto resorted in the short-term move of establishing the mining company for the electronic currency in Dubai. Nevertheless, this kind of structure and arrangements are very unlikely to benefit the people in the Central African country on the long-term. If Bangui is willing to support this technology, major reforms are needed in the electricity sector to increase access and reliability. President Touadera can follow two paths with that regard.
The first one would involve power plants that rely on conventional fossil fuels, such as coal, oil and natural gas, or hydropower stations. Currently, Bangui is mostly an oil importer, part of which is used to power the only thermal station in the country, located in Bangui. Imports come mainly from DR Congo($37.8mln), with France being also a significant oil partner($547k). A decision to build several conventional power plants to support digital currency mining would require, first of all, major funding. For a country that has around 45% debt-to-GDP ratio and has already resorted to the IMF for assistance 17 times and still has unresolved arrangements, seeking assistance to international financial institutions would face backlashes. Additional imports will also be needed. For both challenges to be overcome, another obstacle are the sustainability pledges in light of the Paris Agreement. Development banks, for example, are no longer funding such projects, even if they will actually change the macroeconomic landscape in a country. CAR will then need to involve global key players that still support conventional fuels, such as Russia and China. And while Moscow is in a financially weakened position amidst its isolations following the invasion of Ukraine, China is better situated. However, Beijing has also made several promises to participate in combating climate change. These promises limit the potential maneuvers it can make with regards to fossil fuel investments, but they certainly do not constitute a complete ban. These can be considered good news for Bangui and it can pursue support from the East Asian giant, but it is advisable that they do so with caution, as alleged debt traps are already starting to generate devastating results in countries such as Sri Lanka and Pakistan.
The second path would encompass broad investments in intermittent renewable energy units, such as solar and wind parks. This move has an acutely higher chance of attracting investment from key actors from around the world, both public, private but also international financial institutions with much friendlier arrangements. In this case, however, other issues come up. A grid that relies heavily on intermittent RES is a decentralized grid that requires modernization both of its infrastructure and its regulatory framework. Both will need resources, which translates to additional funding/potential debt, but also higher technical expertise, which is very challenging to be found within the country. A big impediment with that regard is expected to be put by the government as well. Reflecting on the fact that the government in Bangui scored solely 24/100 in the transparency index, place in the 154th position globally, modernization and unbundling of the grid is a tedious process that mandates transparency and hence a conflict of interest is projected to happen. Last, but not least, the ambitions of President Touadera to make CAR a blockchain hub could also backfire, converting it into a terrorist hub instead. Electronic currency mining hubs in a decentralized grid become an extremely appealing target, both to control energy resources and to make untraceable financial transactions. Considering CAR’s proximity to Lake Chad, where FACT rebels and Boko Haram have occasionally been active, and to the Great Lakes, where the ADF currently operates, making such reforms for a radical shift to decentralization ought to come with the respective security measures.
Geopolitical and Security Implications for a Conflict-Torn Region
Comprehending the myriad challenges that the Central African state will have to face, so that the adoption of bitcoin can actually have a substantial societal impact, many are contemplating on potential hidden agendas in Bangui. The action of Russian PMC’s in CAR to fight insurgents, such as terrorist groups, audibly delineate the status of the Kremlin as a security partner for the country. Considering the alliance of the two countries and the fact that, virtually simultaneously, both states started exploring the possibility of using digital currencies, this move can be seen as additional pressure from Moscow to exert influence to partners in Sub-Saharan Africa. The fact that Gazprom Neft decided to partner with BitRiver, the largest crypto-mining colocation services supplier, for the mining of bitcoin with flare gas, depicts that Russia sees another solution to break out of the isolation by the global community due to the war in Ukraine and that solution is decentralized finance. This means that, from now on, electronic currency from blockchain has the potential of being converted to a geopolitical asset, or even geopolitical weapon. This becomes remarkably alarming if one considers that the outreach of the Russian mercenaries spans across Sudan, South Sudan, Madagascar, Mozambique, Libya and other African states.
For Moscow and its security partners, this creates a fine line between strengthening their partnership and becoming a harbor for terrorists which will enhance instability and mayhem. On one hand, this will increase financial interconnection with Sub-Saharan Africa, which is something that the Kremlin is currently lacking and the situation is expected to get worse. Trade with Africa is projected to be heavily disrupted due to the sanctions and decentralized finance can function as a lifeline for Moscow, but also as a way to even enlarge its influence. On the other hand, a form of currency that is not able to be controlled by a centralized authority, in a terrorism-torn region, has a high chance of being used for financial transactions between terrorists. This can make the job of the Russian PMC’s orders of magnitude difficult and destabilize Central and Southern Africa. Combined with the effects of the pandemic and climate change over the past years, a mix of devastation that can wreak complete havoc has high potential of occurring.
As final, and obvious, potential geopolitical implications, Sub-Saharan Africa can easily turn into a fully fragmented arena based on each country’s stance on cryptocurrency. Countries such as Cameroon and Gabon have a clear stance against the actions of CAR and have audibly stood against the actions of Russia in Ukraine. This decision from Bangui comes as a means for additional polarization, leading to a decrease in collaboration efforts within the region. A further fragmentation can only be seen as a positive outcome for terrorist groups to expand their action across Central and Southern Africa. It can also lead to escalations and a replication of the battlefield in Ukraine. This would be a catastrophic scenario, as CEMAC has made colossal efforts and steps forward to maintain regional peace and stability. Other regional security guarantors, such as France, ought to pay a great deal of attention during the coming months and even play the role of the mediator, should any verbal disputes arise.
What does the future have in store for CAR and Central Africa?
Blockchain is a disruptive technology that can have an immense positive impact on the local communities, if circumstances allow and if used appropriately. This does not seem to be the case for CAR, as President Touadera made a bold move of adopting bitcoin as a legal ledger, but has done so without considering the current major limitation posed by the electricity grid nor the geopolitical implications for the region. Both internally and regionally this can create a chain of events that can have far-reaching ramifications for regional stability and can end up backfiring for cryptocurrency enthusiasts’ ambitions to increase the usage of decentralized finance. Combined with the current shift of the geopolitical world order and the influence of the Kremlin on Bangui, there are numerous signs that digital currencies might start being used as a geopolitical weapon. The international community, with EU being a key player, ought to pay more attention to the Central African region. Important state actors, such as France, but also international institutions both on security and on finance, such as NATO, the IMF and African Development Bank, need to immediately approach regional players that are willing to cooperate, such as Cameroon and Gabon, but also to approach CAR directly and engage with CEMAC as a whole to find a solution that is fit for everyone, before potential disputes escalate, something that might be used by Russia as leverage later on.
With Peace and Accountability, Oil and Agriculture Can Support Early Recovery in South Sudan
Economic recovery has stalled in South Sudan amid a multitude of crises, including the COVID-19 pandemic, climate shocks and dwindling oil production, and most recently, the adverse effect of the broad-based rise in commodity prices brought on by the war in Ukraine.
The latest World Bank economic analysis for South Sudan, Directions for Reform: A Country Economic Memorandum (CEM) for Recovery and Resilience, highlights the need for the country to leverage its natural capital in the agriculture and oil sectors to support recovery and resilience.
Oil and agriculture are the most important sectors of South Sudan’s economy, with oil contributing to 90 percent of revenue and almost all exports, while agriculture remains the primary source of livelihood for more than four in five households. Thus, the report suggests a focus on the country’s use of its main endowments of natural capital—oil and arable land—is warranted in the early stages of recovery.
“Getting South Sudan to realize its potential will require steps aimed at consolidating peace and strengthening institutions, as well as targeted reforms tailored at harnessing South Sudan’s rich natural capital for development impact as first-order prerequisites for inclusive economic recovery,” said Firas Raad, World Bank Country Manager for South Sudan.
With weak institutions and recurring cycles of violence, South Sudan remains caught in a web of fragility and economic stagnation a decade after independence. A dearth of economic opportunities and food insecurity are major concerns, and are reinforced by inadequate provision of services, infrastructure deficits, displacement, and recurring climatic shocks
The cost of the conflict has been immense, with South Sudan’s real gross domestic product (GDP) per capita in 2018 estimated at being one-third of the counterfactual estimated for a non-conflict scenario. However, authorities in 2020 initiated an ambitious reform program aimed at macroeconomic stabilization and modernization of the country’s public financial management architecture. With this reform effort, the gap between the official and parallel exchange rates was eliminated, and inflation declined. To consolidate and broaden these gains, more will have to be done to strengthen governance systems and improve transparency in economic management.
“Three messages emerge from this report. First, there is a peace dividend in South Sudan. South Sudan’s real GDP per capita in 2018 was estimated at one third of the counterfactual estimated for a non-conflict scenario. Thus, maintaining peace can by itself be a strong driver of growth. Second, with better governance and accountability, South Sudan’s oil resources can drive transformation. Third, South Sudan’s chronic food insecurity could be reversed with targeted investments to improve the resilience of the agricultural sector,” said Joseph Mawejje, World Bank Country Economist for South Sudan.
The CEM outlines several recommendations, including:
- Addressing the drivers of fragility, ending all forms of conflict, and ensuring peace and stability in all parts of the country are prerequisites for an inclusive economic recovery.
- Stay the course on macroeconomic reforms and continue on a stabilization path, building on key milestones already achieved in unifying the exchange rate and taming inflation.
- Improve oil sector governance by ensuring that all oil revenues and expenditures are on budget and used effectively to achieve national development goals.
- Support the resilience of agricultural sector to reverse the food crisis and achieve food security for all households.
The Country Economic Memorandum is a World Bank Knowledge product that provides an assessment of the country’s drivers of growth and productivity. In this context, this report highlights what South Sudan can do to sustain future growth, but it also shows why the country has not yet managed to achieve high levels of diversified growth alongside peace, stability, and a better standard of living for its people. The report also suggests strategic pathways by which South Sudan can break free from its legacy of persistent food insecurity, in a country with enormous agricultural potential.
Victoria Nuland visits Djibouti, Mozambique and Nigeria, Pledges US$40 million to Support Mozambique
Reports monitored from the U.S. Department of State, Deutsche Welle and Rádio Moçambique have shown that the United States would be assisting with a further donation of US$40 million (€38.2 million) to support the displaced and victims of natural disasters in northern Mozambique. In addition, the United States would also offer US$14 million annually, over the next ten years to help rebuild Cabo Delgado.
US Under-Secretary of State for Political Affairs, Victoria Nuland, announced these after visiting World Food Program (WFP) warehouses in the city of Matola, Maputo province. She was on an official visit to Djibouti, Mozambique and Nigeria, June 11-17, 2022.
In Djibouti, Under Secretary Nuland and an interagency team interacted with government counterparts to advance U.S.-Djibouti relations and close security cooperation.
In Mozambique, the Under Secretary and team held talks with government and civil society members. It relates to the full range of bilateral and regional issues, including opportunities to advance stability and economic recovery in conflict-affected areas in support of our new partnership under the U.S. Strategy to Prevent Conflict and Promote Stability.
In Nigeria, Under Secretary Nuland and the team discussed with government and civil society representatives significant issues of shared concern including regional security, free and fair elections, and business innovation. Throughout the trip, the Under Secretary highlighted the important work the United States has been doing with African and international partners to shore up global food security and health systems.
With Mozambique, Nuland said the financial grants were part of the “emergency response to the food needs of those displaced by war and terrorism, social protection, building resilience to climate change and nutritional support for children” and the priority was to prevent “people in a situation of food insecurity in Mozambique from falling into a situation of hunger” in the country.
She emphasised that the United States would also try to persuade other rich countries to provide more aid to victims of hunger in the world, especially in Africa, especially given the worsening of the situation due to “the blockade of cereals by Russia” in the context of its invasion of Ukraine.
“One of the great global challenges is food insecurity,” which “results from climate change, droughts, conflicts and terrorism, exacerbated by the war waged by Russia against Ukraine,” she explained.
Of the amount announced by the United States government, WFP will receive the largest share, worth US$29.5 million (€28.2 million). “It is timely support from the US, because it allows us to maintain humanitarian assistance to the approximately 940,000 war-displaced people from Cabo Delgado until September,” WFP Mozambique director Antonella D’Aprile said.
D’Aprile said that the resources made available would make it possible to help victims of armed violence in Cabo Delgado and host families in the provinces of Nampula and Niassa, for which the WFP needs US$17.4 million a month. The United States is the largest WFP donor in Mozambique, having channelled US$207 million (€197 million) since 2017.
The International Organization for Migration (IOM) estimates that almost 12,000 people have fled the new wave of attacks on Cabo Delgado that began about a week ago, this time in the south of the province, which was considered a safe zone. More than half are children and there are at least 125 pregnant women among the terrorised population, some of whom are fleeing for a second time, abandoning places where they were starting life anew.
The new wave of attacks is hitting areas around 100 kilometres from Pemba, which already served as refuge for people forced in recent years to leave the worst affected areas to the north, with the epicentre in districts close to the gas extraction projects under construction.
Joint forces of the Southern African Development Community and the Mozambican government killed an unspecified number of terrorists and wounded others in an offensive against armed groups in Cabo Delgado on June 9th.
Cabo Delgado province, in northern Mozambique, is rich in natural gas, but has been terrorized since 2017 by armed rebels, with some attacks claimed by the Islamic State extremist group. According to the International Organization for Migration (IOM), about 784,000 persons have been internally displaced by the conflict, which has killed about 4,000, according to the ACLED conflict registry project.
Since July 2021, an offensive by government troops, with the support of Rwandan and later Southern African Development Community (SADC) troops, has recovered a number of areas from rebel control, but their flight has led to new attacks in districts through which they have passed or taken up temporary refuge.
African leaders at the summit of the African Union held in Addis Ababa highly praised Mozambique’s approach to terrorism in the northern province of Cabo Delgado, involving troops from Rwanda and the Southern African Development Community Military Mission (SAMIM).
Mozambican Minister of Foreign Affairs and Cooperation, Verónica Macamo, has expressed confidence in the election to the UN Security Council, saying that the experience in the fight against terrorism would be an “advantage” in its favour.
Mozambique, during its campaign for UNSC seat, was support by the African Union. June witnessed the final election of five member states – Ecuador, Japan, Malta, Mozambique and Switzerland – for the five new non-permanent member seats at the United Nations (UN) Security Council for the 2023-2024.
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